Monday, September 27, 2010

The strong likelihood of tepid economic growth through next year suggests unemployment may rise, rather than fall, as many forecasters currently predict.

In a paper published Monday, economists at the Federal Reserve Bank of San Francisco warn business cycle analysis generated within the central bank system is pointing to growth that will be “at or below potential” growth levels.

This modest rate of advancement won’t be enough to generate the needed level of job growth, which suggests “the unemployment rate could rise by as much a 0.5 percentage point during this period,” moving from the current level of 9.6% to 10.1%. The paper’s authors, economists David Lang and Kevin Lansing, observe “such a scenario would take the unemployment rate back to the peak recorded in October 2009.”